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Two New Yorks

Rochester Business Journal

May 31, 2013

In Andrew Cuomo's New York, taxes are falling or disappearing entirely, burdensome regulations are in retreat, and government incentives are luring out-of-state firms and fueling homegrown startups.

Many companies, however, know another New York-one where high taxes and other costs combine with a tangle of regulations to create one of the nation's most inhospitable business environments.

Both New Yorks exist. But unless your firm is one of relatively few favored businesses, it's hard to see the state Mr. Cuomo describes.

The governor's new Tax-Free NY is a perfect example of his "some are more equal than others" approach to economic development. It will create "tax-free communities" at SUNY campuses, some private universities, 20 "strategically located" state-owned properties and some properties adjoining the state schools.

This program, his office says, "will entice companies to invest in Upstate New York by offering new businesses the opportunity to operate completely tax-free-including no income tax for employees, no sales, property or business tax-for a decade, while also partnering with the world-class public and private higher education institutions."

These incentives are designed with certain types of businesses in mind: out-of-state firms willing to relocate, startups and "companies with a relationship to the academic mission of the university." Left unsaid is that most existing N.Y. businesses would not be eligible.

High taxes and excessive regulation are an enormous impediment to economic growth in New York. Those were the biggest factors cited recently by the American Legislative Exchange Council and Chief Executive magazine when, separately, they called New York the second-worst state in the nation in economic outlook and business climate.

So if the remedy is to cut taxes and strip away unnecessary rules, why not do it for all businesses?

The answer, one must conclude, is that Mr. Cuomo and many Albany lawmakers think they know best. New York would be better served if they had more faith in the idea of a state friendly to all businesses-where success was determined by the ability to compete, not tax breaks or other government incentives.